May 24, 2017

One thing that won't change with GOP health bill: Medicaid coverage losses

(J. Scott Applewhite / AP)

There's a lot of uncertainty about how the Congressional Budget Office will estimate the costs of the GOP health care bill the House passed earlier this month. But one thing that's almost certain: It won't change its estimate that 14 million people will lose their Medicaid coverage.

That's because the House didn't change the bill's Medicaid provisions since CBO analyzed an earlier version of the bill. It makes significant cuts to the program, which will knock millions of people off their coverage. It then pairs these cuts with tax credits for those on the individual market, which fall well short of what very low-income people need to afford insurance, experts say.

What we're watching: Whether the Senate shores up the tax credits enough to put coverage within reach of people near the poverty line and helps with their other costs. If it doesn't, coverage will remain out of reach for the poor.

The House made other changes to the bill, including state waivers that could affect private health insurance. But the two main reasons for the Medicaid coverage losses haven't changed: The bill phases out the Affordable Care Act's expansion of the program, and it limits how much federal funding each enrollee gets.

And because the bill's tax credits wouldn't adjust for income, "there's just no way most people at or near poverty now eligible for Medicaid could afford to buy even a high deductible plan in the individual market," Larry Levitt, vice president of the Kaiser Family Foundation, told me.

What you need to know:

  • Both CBO and Medicaid experts predict that many states that expanded Medicaid — if not most — would drop the expansion of the program, because they wouldn't be able to afford it after federal funds are scaled back.
  • If that happens, the best option for people who just gained Medicaid coverage would be the individual market, where tax credits are offered based on age and vary between $2,000 and $4,000.
  • The House bill does not provide any kind of help for deductibles or out-of-pocket costs for low-income people, like the ACA does.
  • A $130 billion fund might help states reduce premiums, but probably not enough. And most of the money probably would be used to help sick people, not low-income people.

Here's an example, per the Brooking Institution's Matthew Fiedler:

  • A 45-year-old at 75 percent of the poverty line — currently eligible for Medicaid in an expansion state — would make around $9,500 in 2020.
  • An average "silver" plan, which is often used as a benchmark, would likely cost around $5,500 by 2020. The House bill's tax credit would cover $3,000 of this.
  • So this person would still be on the hook for $2,500 of the premium, which is more than a quarter of his or her income.
  • "Few would purchase insurance under such conditions," Fiedler told me.

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